Hong Kong government proposal for residents to convert pensions into annuities ‘absurd’ if made mandatory, labour minister says
A Hong Kong government proposal to encourage residents to convert their pensions into annuities would be “absurd” if made mandatory, the city’s labour minister said on Thursday.
Secretary for Labour and Welfare Law Chi-kwong said that while studying the proposal was necessary, making it mandatory to convert Mandatory Provident Fund (MPF) pension plans into annuities was never going to happen in Hong Kong.
“If anyone just thought about it, forcing everyone in Hong Kong to switch to an annuity is absurd, it would never happen,” he told a radio show.
“The most important thing in Hong Kong is choice. Whatever [policy] you are designing, it must give people a choice. Of course, every option must be considered when drafting a new policy, so even though I think this will not work for Hong Kong, I must still prove why it cannot happen.”
Hong Kong’s MPF requires both employers and employees to make monthly contributions as part of their salary structure. MPF providers invest the money on behalf of workers, who can choose the risk level of the investments themselves.
An annuity is similar to the purchase of an insurance product, whereby an individual can choose to put in a lump sum and receive a regular stream of payment in return.
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